Vimpelcom to sell iPhone without subsidy

MOSCOW Mon Sep 8, 2008 4:03pm EDT

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MOSCOW (Reuters) - Russia's Vimpelcom VIP.N will not subsidize Apple (AAPL.O) iPhones, which it plans to start selling later this year, Alexander Izosimov, chief executive officer of the fixed-to-mobile telecoms company, said on Monday.

"We are in principle considering no subsidies for the time being as Russian law does not allow locking mobile phones," Alexander Izosimov, Vimpelcom's chief executive officer, said in an interview at the Reuters Russia Investment Summit.

In some countries operators subsidize mobile phones to make them more affordable but at the same time tie up customers with lengthy contracts and "lock" the handsets to prevent users from switching operators.

In Russia, where nearly half a million people already own a previous version of the iPhone even though it is not officially sold here, this system does not work.

Izosimov said Vimpelcom, which became the first Russian carrier to sign a distribution deal with Apple in August, was eager to kick off iPhone sales to keep pace with key developments in the telecommunications sector.

"The earlier we start working with it, the better we will be prepared. It is not technologies that will change, but the business model," Izosimov said at the event, held at the Reuters office in Moscow.

"Our research shows that when the iPhone falls into the hands of a customer, the use of data services increases by four to five times," he said, adding that the IPhone would drive the convergence of the telephone and computer industries.

Vimpelcom announced the deal with Apple to sell a 3G version of the popular touch-screen, Web-browsing phone capable of faster data speeds than the original, at the end of August, followed by its main rivals MTS (MBT.N) and MegaFon.

The carriers did not disclose details of their deals with the iPhone maker, but industry sources have said Apple expected to sell 3.5 million iPhones in Russia in the next two years.

Russian operators get the bulk of their revenues from voice traffic, with a much smaller share of value-added data services than Western operators. They hope that smartphones such as the iPhone will stimulate subscribers to use more services such as mobile Internet and data transmission.

(Reporting by Maria Kiselyova and Anastasia Teterevleva; Editing by Phil Berlowitz;)

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